COPPELL, Texas--(BUSINESS WIRE)--Aug. 8, 2017--
Mannatech,
Incorporated(NASDAQ: MTEX),
a global health and wellness company committed to transforming lives to
make a better world, today announced financial results for its second
quarter of 2017.
Second Quarter Results
Second quarter net sales for 2017 were $47.7 million, a decrease of $1.1
million, or 2.3% as compared to $48.8 million in the second quarter of
2016. Income (loss) from operations was $2.8 million for the second
quarter 2017, as compared to $(0.1) million in the same period in 2016.
Net income (loss) was $1.8 million, or $0.65 per diluted share, for the
second quarter 2016, as compared to $(1.3) million, or $(0.49) per
diluted share, for the second quarter 2016.
For the three months ended June 30, 2017, our net sales declined 3.5% on
a constant dollar basis (see Non-GAAP Financial Measures, below)
as compared to the same period in 2016. Excluding the effects due to the
translation of foreign currencies into U.S. dollars, net sales would
have declined $1.7 million for the three months ended June 30, 2017.
For the three months ended June 30, 2017, Mannatech’s operations outside
of the Americas accounted for approximately 59.1% of Mannatech’s
consolidated net sales.
Second quarter 2017 Asia/Pacific net sales decreased by $1.6 million, or
6.1%, to $24.7 million, as compared to $26.3 million for the same period
in 2016. This decrease was primarily due to a 9.0% decrease in revenue
per active independent associate and member, which was partially offset
by a 3.2% increase in the number of active independent associates and
members. During the three months ended June 30, 2017, the loyalty
program increased sales by $0.3 million, as compared to the same period
in 2016. Foreign currency exchange had the effect of increasing revenue
by $0.4 million for the three months ended June 30, 2017, as compared to
the same period in 2016. The currency impact is primarily due to the
strengthening of the Korean Won and Taiwanese Dollar, which was
partially offset by the weakening of the Japanese Yen and Chinese Yuan
(Renminbi).
EMEA net sales remained the same at $3.5 million for the three months
ended June 30, 2017 and 2016. During this comparative period, the number
of active independent associates and members in EMEA increased 1.0%,
which was partially offset by a 1.0% decrease in revenue per active
independent associate and member. Foreign currency exchange had the
effect of increasing revenue by $0.2 million when the three-month period
ending June 30, 2017 is compared to the same period in 2016. The
currency impact is primarily due to the strengthening of the South
Africa Rand, which was partially offset by the weakening of the British
Pound and the Euro.
For the three months ended June 30, 2017, net sales in the Americas
increased by $0.5 million, or 2.6%, to $19.5 million, as compared to
$19.0 million for the same period in 2016. This increase was primarily
due to a 12.1% increase in revenue per active independent associate and
member, which was partially offset by an 8.5% decline in the number of
active independent associates and members. During the three months ended
June 30, 2017, the loyalty program in the Americas increased sales by
$0.4 million, as compared to the same period in 2016.
Commission expenses for the three months ended June 30, 2017 decreased
by 5.7%, or $1.1 million, to $18.3 million, as compared to $19.4 million
for the same period in 2016. For the three months ended June 30, 2017,
commissions as a percentage of net sales decreased to 38.5% from 39.7%
for the same period in 2016. During the first quarter, we recorded
commission expense on the pre-launch in certain Asia/Pacific markets of
new products that were available after our annual convention held in
April 2017.
Incentive costs for the three months ended June 30, 2017 decreased by
30.0%, or $0.3 million, to $0.7 million, as compared to $1.0 million for
the same period in 2016. The decrease was due to a decline in the number
of qualified individuals within the Americas attending incentive trips.
For the three months ended June 30, 2017, incentives as a percentage of
net sales decreased to 1.3% from 2.1% for the same period in 2016.
The number of new and continuing active independent associates and
members who purchased our packs or products during the twelve months
ended June 30, 2017 and 2016 were approximately 218,000 and 222,000,
respectively. Recruitment of new independent associates and members
decreased 6.7% during the three months ended June 30, 2017 as compared
to the same period in 2016. The number of new independent associate and
member positions held by individuals in our network for the three months
ended June 30, 2017 was approximately 26,500, as compared to 28,400 for
the same period in 2016.
For the three months ended June 30, 2017, selling and administrative
expenses increased by $0.3 million, or 2.5%, to $10.0 million, as
compared to $9.7 million for the same period in 2016. Our marketing
related costs increased $0.4 million due to increased expenses in
respect of our Mannafest event held in Las Vegas. During the second
quarter, we recorded severance charges of $0.2 million, which were
partially offset by decreases in other payroll costs stemming from fewer
employees and a $0.1 million decrease in stock based compensation
expense. Selling and administrative expenses, as a percentage of net
sales, for the three months ended June 30, 2017 increased to 20.9% from
19.9% for the same period in 2016.
For the three months ended June 30, 2017, other operating costs
decreased by $1.5 million, or 18.8%, to $6.7 million, as compared to
$8.2 million for the same period in 2016. For the three months ended
June 30, 2017, other operating costs as a percentage of net sales
decreased to 14.0% from 16.8% for the same period in 2016. The decrease
was due to a $0.7 million decrease in travel and entertainment costs, a
$0.3 million decrease in accounting and auditing fees, a $0.3 million
decrease in legal and consulting fees and a $0.2 million decrease in bad
debt expense.
As of June 30, 2017, our cash and cash equivalents increased by 24.0%,
or $6.9 million, to $35.6 million from $28.7 million as of December 31,
2016. Our inventory balance at June 30, 2017 was $10.9 million, compared
to $12.0 million at December 31, 2016, reflecting sales at our
successful Mannafest event in Las Vegas, Nevada, in April.
Our accounts payable balance at June 30, 2017 increased to $6.1 million,
compared to $5.2 million at December 31, 2016, due to incentive costs.
At June 30, 2017, our commissions and incentives payable increased to
$9.7 million from $8.8 million at December 31, 2016, due to timing of
our commission payments. During the second quarter of 2017, we paid
dividends of $0.3 million and repurchased approximately $0.1 million of
our stock.
Non-GAAP Measures
In addition to results presented in accordance with GAAP, this press
release and related tables include certain non-GAAP financial measures,
including a presentation of constant dollar measures. We disclose
operating results that have been adjusted to exclude the impact of
changes due to the translation of foreign currencies into U.S. dollars,
including changes in: Net Sales, Gross Profit, and Income from
Operations.
We believe that these non-GAAP financial measures provide useful
information to investors because they are an indicator of the strength
and performance of ongoing business operations. The constant currency
figures are financial measures used by management to provide investors
an additional perspective on trends. Although we believe the non-GAAP
financial measures enhance investors’ understanding of our business and
performance, these non-GAAP financial measures should not be considered
an exclusive alternative to accompanying GAAP financial measures. Please
see the accompanying table entitled "Non-GAAP Financial Measures" for a
reconciliation of these non-GAAP financial measures.
Conference Call
Mannatech will host a conference call to discuss the quarter’s results
with investors on Wednesday, August 9, 2017 at 9 a.m. CDT, 10 a.m. EDT.
The live call will be webcast and can be accessed on Mannatech’s website
at http://ir.mannatech.com.
For those unable to listen to the live broadcast, a replay will be
available shortly after the call. The toll-free replay number is (855)
859-2056 (International (404) 537-3406); the Conference ID to access the
call is 62143919.
Individuals interested in Mannatech’s products or in exploring its
business opportunity can learn more at Mannatech.com.
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| MANNATECH, INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
|
(in thousands, except share and per share amounts)
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| ASSETS |
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|
June 30, 2017
(unaudited)
|
|
|
December 31,
2016
|
|
Cash and cash equivalents
|
|
|
$
|
35,561
|
|
|
|
$
|
28,687
|
|
|
Restricted cash
|
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|
1,514
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|
|
|
|
1,510
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Accounts receivable, net of allowance of $507 and $463 in 2017 and
2016, respectively
|
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|
|
405
|
|
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|
|
298
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Income tax receivable
|
|
|
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3
|
|
|
|
|
1,587
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|
|
Inventories, net
|
|
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|
10,868
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|
|
|
|
11,961
|
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|
Prepaid expenses and other current assets, net
|
|
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|
2,659
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|
|
|
|
3,483
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Deferred commissions
|
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|
3,233
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|
|
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|
3,229
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| Total current assets |
|
|
|
54,243 |
|
|
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|
50,755 |
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Property and equipment, net
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|
3,234
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|
|
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|
3,611
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Construction in progress
|
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1,294
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|
|
|
|
1,012
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Long-term restricted cash
|
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|
|
6,776
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|
|
|
|
6,429
|
|
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Other assets
|
|
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|
3,617
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|
|
|
|
4,013
|
|
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Long-term deferred tax assets, net
|
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|
5,595
|
|
|
|
|
5,368
|
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| Total assets |
|
|
$ |
74,759 |
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|
$ |
71,188 |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current portion of capital leases
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$
|
392
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$
|
357
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Accounts payable
|
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6,130
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|
|
|
|
5,223
|
|
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Accrued expenses
|
|
|
|
5,139
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|
|
|
|
5,605
|
|
|
Commissions and incentives payable
|
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|
9,679
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|
|
|
|
8,799
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|
Taxes payable
|
|
|
|
1,528
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|
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|
1,040
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Current notes payable
|
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|
|
843
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|
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|
|
801
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Deferred revenue
|
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8,326
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|
|
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|
8,156
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| Total current liabilities |
|
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32,037 |
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|
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|
29,981 |
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Capital leases, excluding current portion
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182
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|
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261
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Long-term deferred tax liabilities
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30
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29
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Long-term notes payable
|
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286
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|
|
567
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|
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Other long-term liabilities
|
|
|
|
1,413
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|
|
|
|
1,465
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| Total liabilities |
|
|
|
33,948 |
|
|
|
|
32,303 |
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Commitments and contingencies
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| Shareholders’ equity: |
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Preferred stock, $0.01 par value, 1,000,000 shares authorized, no
shares issued or outstanding
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—
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—
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Common stock, $0.0001 par value, 99,000,000 shares authorized,
2,753,789 shares issued and 2,711,372 shares outstanding as of June
30, 2017 and 2,758,275 shares issued and 2,688,790 shares
outstanding as of December 31, 2016
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—
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—
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Additional paid-in capital
|
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35,293
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|
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38,190
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Retained earnings
|
|
|
|
7,202
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|
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|
7,331
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Accumulated other comprehensive income
|
|
|
|
3,482
|
|
|
|
|
1,834
|
|
|
Treasury stock, at average cost, 42,417 shares as of June 30, 2017
and 69,485 shares as of December 31, 2016, respectively
|
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(5,166
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)
|
|
|
|
(8,470
|
)
|
| Total shareholders’ equity |
|
|
|
40,811 |
|
|
|
|
38,885 |
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| Total liabilities and shareholders’ equity |
|
|
$ |
74,759 |
|
|
|
$ |
71,188 |
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| MANNATECH, INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED) |
|
(in thousands, except per share information)
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Three Months Ended
June 30,
|
|
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|
Six Months Ended
June 30,
|
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2017 |
|
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2016 |
|
|
|
2017 |
|
|
2016 |
| Net sales |
|
|
$ |
47,686 |
|
|
|
$ |
48,810 |
|
|
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|
$ |
88,327 |
|
|
|
$ |
89,518 |
|
|
Cost of sales
|
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|
8,786
|
|
|
|
|
10,100
|
|
|
|
|
|
17,548
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|
|
|
|
18,489
|
|
| Gross profit |
|
|
|
38,900 |
|
|
|
|
38,710 |
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|
|
|
70,779 |
|
|
|
|
71,029 |
|
|
Operating expenses:
|
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|
|
|
|
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|
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|
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Commissions and incentives
|
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|
18,994
|
|
|
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|
20,417
|
|
|
|
|
|
36,075
|
|
|
|
|
36,034
|
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Selling and administrative expenses
|
|
|
|
9,978
|
|
|
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|
9,730
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|
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|
18,632
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|
|
|
|
18,322
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|
Depreciation and amortization expense
|
|
|
|
453
|
|
|
|
|
477
|
|
|
|
|
|
955
|
|
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|
|
920
|
|
|
Other operating costs
|
|
|
|
6,656
|
|
|
|
|
8,198
|
|
|
|
|
|
14,332
|
|
|
|
|
15,329
|
|
|
Total operating expenses
|
|
|
|
36,081
|
|
|
|
|
38,822
|
|
|
|
|
|
69,994
|
|
|
|
|
70,605
|
|
| Income (loss) from operations |
|
|
|
2,819 |
|
|
|
|
(112 |
) |
|
|
|
|
785 |
|
|
|
|
424 |
|
|
Interest income
|
|
|
|
19
|
|
|
|
|
23
|
|
|
|
|
|
48
|
|
|
|
|
11
|
|
|
Other income (expense), net
|
|
|
|
(9
|
)
|
|
|
|
(1,037
|
)
|
|
|
|
|
32
|
|
|
|
|
(703
|
)
|
| Income (loss) before income taxes |
|
|
|
2,829 |
|
|
|
|
(1,126 |
) |
|
|
|
|
865 |
|
|
|
|
(268 |
) |
|
Income tax provision
|
|
|
|
(1,034
|
)
|
|
|
|
(206
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)
|
|
|
|
|
(317
|
)
|
|
|
|
(472
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)
|
| Net income (loss) |
|
|
$ |
1,795 |
|
|
|
$ |
(1,332 |
) |
|
|
|
$ |
548 |
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|
|
$ |
(740 |
) |
| Earnings (loss) per common share: |
|
|
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|
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|
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Basic
|
|
|
$ |
0.66 |
|
|
|
$ |
(0.49 |
) |
|
|
|
$ |
0.20 |
|
|
|
$ |
(0.27 |
) |
|
Diluted
|
|
|
$ |
0.65 |
|
|
|
$ |
(0.49 |
) |
|
|
|
$ |
0.19 |
|
|
|
$ |
(0.27 |
) |
| Weighted-average common shares outstanding: |
|
|
|
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Basic
|
|
|
|
2,711 |
|
|
|
|
2,707 |
|
|
|
|
|
2,706 |
|
|
|
|
2,701 |
|
|
Diluted
|
|
|
|
2,778 |
|
|
|
|
2,707 |
|
|
|
|
|
2,775 |
|
|
|
|
2,701 |
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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Non-GAAP Financial Measures
To supplement our financial results presented in accordance with
generally accepted accounting principles in the United States (“GAAP”),
we disclose operating results that have been adjusted to exclude the
impact of changes due to the translation of foreign currencies into U.S.
dollars, including changes in: Net Sales, Gross Profit, and Income from
Operations. We refer to these adjusted financial measures as constant
dollar items, which are non-GAAP financial measures. We believe these
measures provide investors an additional perspective on trends. To
exclude the impact of changes due to the translation of foreign
currencies into U.S. dollars, we calculate current year results and
prior year results at a constant exchange rate, which is the prior
year’s rate. Currency impact is determined as the difference between
actual growth rates and constant currency growth rates.
| Three-month period ended (in millions, except percentages)
|
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|
June 30, 2017 |
|
|
|
June 30, 2016 |
|
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Constant $ Change |
|
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GAAP Measure:
Total $
|
|
|
Non-GAAP Measure:
Constant $
|
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|
|
GAAP Measure:
Total $
|
|
|
|
Dollar |
|
|
Percent |
|
Net Sales
|
|
|
$
|
47.7
|
|
|
$
|
47.1
|
|
|
|
$
|
48.8
|
|
|
|
|
$
|
(1.7
|
)
|
|
|
(3.5
|
)%
|
|
Product
|
|
|
|
40.3
|
|
|
|
39.8
|
|
|
|
|
40.1
|
|
|
|
|
|
(0.3
|
)
|
|
|
(0.7
|
)%
|
|
Pack
|
|
|
|
6.0
|
|
|
|
5.9
|
|
|
|
|
7.5
|
|
|
|
|
|
(1.6
|
)
|
|
|
(21.3
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)%
|
|
Other
|
|
|
|
1.4
|
|
|
|
1.4
|
|
|
|
|
1.2
|
|
|
|
|
|
0.2
|
|
|
|
16.7
|
%
|
|
Gross Profit
|
|
|
|
38.9
|
|
|
|
38.4
|
|
|
|
|
38.7
|
|
|
|
|
|
(0.3
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)
|
|
|
(0.8
|
)%
|
|
Income (loss) from Operations
|
|
|
|
2.8
|
|
|
|
2.5
|
|
|
|
|
(0.1
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)
|
|
|
|
|
2.6
|
|
|
|
(2,600.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
| Six-month period ended (in millions, except percentages)
|
|
|
June 30, 2017 |
|
|
|
June 30, 2016 |
|
|
|
Constant $ Change |
|
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|
GAAP Measure:
Total $
|
|
|
Non-GAAP Measure:
Constant $
|
|
|
|
GAAP Measure:
Total $
|
|
|
|
Dollar |
|
|
Percent |
|
Net Sales
|
|
|
$
|
88.3
|
|
|
$
|
86.8
|
|
|
|
$
|
89.5
|
|
|
|
|
$
|
(2.7
|
)
|
|
|
(3.0
|
)%
|
|
Product
|
|
|
|
74.1
|
|
|
|
72.9
|
|
|
|
|
73.8
|
|
|
|
|
|
(0.9
|
)
|
|
|
(1.2
|
)%
|
|
Pack
|
|
|
|
11.7
|
|
|
|
11.4
|
|
|
|
|
13.2
|
|
|
|
|
|
(1.8
|
)
|
|
|
(13.6
|
)%
|
|
Other
|
|
|
|
2.5
|
|
|
|
2.5
|
|
|
|
|
2.5
|
|
|
|
|
|
—
|
|
|
|
—
|
%
|
|
Gross Profit
|
|
|
|
70.8
|
|
|
|
69.6
|
|
|
|
|
71.0
|
|
|
|
|
|
(1.4
|
)
|
|
|
(2.0
|
)%
|
|
Income (loss) from Operations
|
|
|
|
0.8
|
|
|
|
0.2
|
|
|
|
|
0.4
|
|
|
|
|
|
(0.2
|
)
|
|
|
(50.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Mannatech
Mannatech, Incorporated offers a full body wellness experience through
its global network of independent associates and members. With more than
20 years of experience and operations in 26 markets, Mannatech is
committed to transforming lives. For more information, visit Mannatech.com.
Please Note: This release contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended,
and the Private Securities Litigation Reform Act of 1995. These
forward-looking statements generally can be identified by use of phrases
or terminology such as “may,” “will,” “should,” “could,” “would,”
“expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,”
“approximates,” “predicts,” “projects,” “potential,” and “continues” or
other similar words or the negative of such terminology. Similarly,
descriptions of Mannatech’s objectives, strategies, plans, goals or
targets contained herein are also considered forward-looking statements.
This release should be read in conjunction with all of its filings with
the United States Securities and Exchange Commission and Mannatech
cautions its readers that these forward-looking statements are subject
to certain events, risks, uncertainties, and other factors. Some of
these factors include, among others, Mannatech’s inability to attract
and retain associates and members, increases in competition, litigation,
regulatory changes, and its planned growth into new international
markets. Although Mannatech believes that the expectations, statements,
and assumptions reflected in these forward-looking statements are
reasonable, it cautions readers to always consider all of the risk
factors and any other cautionary statements carefully in evaluating each
forward-looking statement in this release, as well as those set forth in
its latest Annual Report on Form 10-K, and other filings filed with the
United States Securities and Exchange Commission, including its current
reports on Form 8-K. All of the forward-looking statements contained
herein speak only as of the date of this release.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170808005339/en/
Source: Mannatech, Incorporated
Mannatech, Incorporated
Donna Giordano, 972-471-6512
Manager,
Executive Office Administration
ir@mannatech.com
www.mannatech.com